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HRM Status In India

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Definition Of HRM
Human Resource Management is to "ensure that at all times the business is correctly staffed by the right number of people with the skills relevant to the business needs"

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Functions of HR

MANAGERIAL FUNCTIONS Planning Organising Directing Controlling

OPERATIVE FUNCTIONS Staffing Development Compensation Motivation Maintenance Integration

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IN ABSENCE OF GOOD HRM, PEOPLE ARE: under valued

under trained

under utilized

poorly motivated

perform well below their true capability


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HRM in India
The HRM practices in Indian Organizations are no doubt

unique. The cultural impact on the hiring practices, compensation standards, benefits and statutory governance, performance linked rewards and payouts and the general day to day management practices through in-step with international HRM practices have a flavor their own. HRM in India is not structurally well-researched and hence a lack of theoretical information to track and document its progress, unlike in the emerged countries like US, UK. Research is yet at its infancy in India.

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Distinction B/W India HRM And Global HRM


The Indian culture is one that is deeply rooted in its societal

and collectivistic values providing for a natural urge to collaborate at the workplace, work in teams and groups and achievements. The diversity that is seen in the Indian society w.r.t. diverse religions and states are reflected in the ability of the Indian and the Indian corporate to tolerate diversity of thinking & working together without inhibition. Work culture wise, hard work, long working hours and need to earn money impact the HRM policies.

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Availability of a educated mass of different caliber of

knowledge and skill allow the country to undertake different nature of work beginning with lower skilled activities such as BPOs & moving up the value curve to far more advanced activities as KPOs Compensation costs as still a competitive advantage for India making it a preferred business location the world over.

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SCOPE OF HR IN INDIA

One very important trend in the recent times has been the

growth of human resource outsourcing. HR outsourcing is the outsourcing of peripheral but necessary administrative tasks such as payroll, benefits, education/training, recruiting personnel, administration, to realize economies of scale and achieve standardization of services.

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Rapidly changing market dynamics and global competitive

pressures have caused organizations to spend more time focusing on their core business. Organizations are fast realizing that they can't be all things to all people. So companies now, be it a software company, a service provider or a manufacturing firm, decide what they are good at and outsource everything else, i.e., focus on their core competency, and let someone else do the rest in a more efficient and cost-effective manner

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As a result, human resources outsourcing is becoming

increasingly prevalent. The number of companies outsourcing HR activities continues to rise, and the scope of outsourced HR activities continues to expand. HR outsourcing can happen in HR functions, like payroll administration (producing checks, handling taxes, dealing with sick-time and vacations), employee benefits (Health, Medical, Life insurance, Cafeteria, etc), human resource management (hiring and firing, background interviews, exit interviews and wage reviews), risk management, etc. Outsourcing has become a common response to manage people and technology resources strategically, enhance services, and manage costs more effectively.
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Looking at India
Background Information History and Societal Background Dealing with Bureaucracy Unfamiliarity and Cultural Distance Culture Dimensions and Profile Staffing Recruitment and Selection of Host Country Nationals (HCN) Compensation Training and Development Implications for Multinationals
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Background Information
Population of 973.5 million Fifth largest country Post independence Import-substitution policy Low cost of Indian labor/ low level of productivity Competitive with technically qualified, software

professionals.

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History and Societal Background


British colony for 100 years. Great national leader: Mahatma Gandhi.

Gandhi introduced the concept of non-violence protest. The Indian social system is dominated by a caste system. Four specific castes; Brahmins, Khastriyas, Vaishyas, Shudras. Created distinct labor categories. Associated status differences

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Dealing with Bureaucracy


Ninth most corrupt country in the world. Pervasive corruption linked to excessive control and

unfulfilled demand
Red tape Widespread tax evasion

Possible Solution:
Establish international joint ventures (IJV) with a partner

who knows the business and the bureaucracy, one with the right connections.

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Unfamiliarity And Cultural Differences


I.J. Sharma in The Culture Context of Indian Managers, states: An average Indian manager represents a plausible picture of the average Indians resistance for change, his willingness to delegate but unwillingness to accept authority, his fear of taking an independent decision, his possessive attitude towards his inferiors and his abject surrender to his superiors, his strict observance of rituals and his disregard of them in practice, his preaching of high morals against personal immorality, and his near-desperate efforts at maintaining the status quo while talking of change.

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Definition of Cultural Dimensions


Power distance: The degree to which organizations and

societies accept power.


Institutional collectivism: The degree to which

organizational and institutional practices encourage collective action.


In-group collectivism: The degree to which individuals

in societies reflect collectivist behavior.


Uncertainty avoidance: The degree to which

organizations and societies avoid uncertainty by relying on practices and procedures.


Performance orientation: The degree to which upper
4/14/12 management in organizations and leaders in societies

Cultural Profile
q Power distance:
q q

India: 5.47 (rank 16). Morocco : 5.80 (highest score).

q Institutional collectivism:
q q

India : 4.38 (rank 25). Sweden: 5.22 (highest score).

q In-group collectivism:
q q

India: 5.92 (rank 4). Philippines: 6.36 (highest score).

q Uncertainty avoidance:
q q

India: 4.15 (rank 29). Switzerland: 5.37 (highest score 4/14/12

Staffing
In complex cultural context like India, it may be more

advantageous to use local managers.

Indian manager knows more than an expatriate manager

could learn in years on the job;

Avoids extra costs associated with relocating expatriates; Reluctance of many Western managers to live in India; Ensures continuity of management as HCNs are likely to stay

longer in the position; and path.

Creates higher morale among HCNs due to a perceived career

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Recruitment and Selection of HCNs

Careful selection of workforce is important


Using an IJV can assist in identifying a suitable workforce IJV may use existing human resources of the local partner The Industrial Dispute Act Dismissals and layoffs are difficult

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Compensation
Foreign multinationals find it difficult to retain high-quality

local staff because of the economic liberalization in the early 1990s. A shortage of skilled people is due to a rapid rise in foreign and local investments. Preconditions to retain experienced staff includes continuous pay increases and commitment to improve working conditions. Pressure on minimum wage level.

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Training and Development


Expatriate training in negotiation and conflict resolution

skills is advocated to enable them to cope with, and resolve, the unexpected issues inherent in the Indian context and IJV situation.

Multinational may provide extensive training programs for

local staff to address low labor productivity.

Introduction of new production equipment and concepts,

such as quality management, require additional training.

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Implications for Multinationals

Suggestions:
Include local staff and practices in building a performance-

based work culture in Indian operations. Choose a skill-based approach to improve labor productivity and better performance. Hire quality HCNs rather than employing expatriates. Include staff training and development.
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